Urban renewal plans in jeopardy

From K Street to the downtown railyard, urban renewal projects in Sacramento and elsewhere have relied heavily on public redevelopment funds.

Until now, perhaps.

Gov. Jerry Brown signed legislation Wednesday that blows a $1.7 billion hole in cities and counties' redevelopment programs. It eliminates the state's 400 redevelopment agencies, although it creates a mechanism allowing them to survive with less money.

Redevelopment agencies are preparing a lawsuit, calling the legislation an unconstitutional cash grab that conflicts directly with a recent state ballot initiative.

But legislators said redevelopment won't die. Although agencies will surrender $1.7 billion in the new fiscal year, they'll lose just $400 million a year in future years, out of an annual budget of $5.5 billion.

In Sacramento, redevelopment money has been used in many notable projects. It revived Old Sacramento in the 1960s and the crime-plagued Franklin Villa housing complex in 2006. The lofts at 16th and J streets, whose tenants include Brown and his wife, Anne Gust Brown, were renovated with redevelopment funds.

Yet redevelopment had become a tempting target as lawmakers sought to tame budget deficits. The Legislature took nearly $2 billion from redevelopment in 2009.

Critics said the system gets abused. State Controller John Chiang recently scolded Palm Desert for allocating $16 million in redevelopment money to improve a luxury golf course deemed "blighted."

Now local officials fret that scores of legitimate projects in the pipeline could falter.

The revival of Sacramento's downtown railyard has been counting on redevelopment money. The same goes for the old PG&E power plant on Jiboom Street, which is supposed to become a science museum, said Leslie Fritzsche, the city's downtown development director.

"If you look around downtown Sacramento today, you will see that virtually all major construction activity going on is happening at projects assisted with redevelopment funds," said La Shelle Dozier, head of the Sacramento Housing and Redevelopment Agency, in a written statement.

The new law jeopardizes such projects as the Township 9 housing complex and the planned face-lift of K Street's dilapidated 800 block, she said.

Projects that have already been funded are probably not in peril, Fritzsche said. That includes the renewal of the 700 block of K Street, which just got approved, and the infrastructure work in progress at the railyard.
Backers of some fledgling projects, like the proposed downtown sports arena, have sidestepped redevelopment funding, knowing that Brown had been trying to kill the agencies since he took office in January.

"It was clear that it was something we couldn't count on," said Chris Lehane, a member of Mayor Kevin Johnson's arena task force.

Brown signed two bills, ABX1 26 and 27, that take aim at redevelopment's complex funding mechanism.
Redevelopment agencies issue bonds to fund projects in blighted areas. As projects come to life, property values rise. But instead of generating gobs of new tax revenue for schools and municipalities, the agencies keep most of the money to repay their bonds.

Because of funding mandates, the state must "backfill" that lost revenue by sending money to schools. That adds to the state's deficit.

By eliminating the agencies in the new budget, lawmakers expect to save $1.7 billion.

The legislation lets redevelopment agencies survive – as long as they pay the schools and municipalities a significant chunk of the tax money they've been using to repay their bonds.

Some agencies couldn't afford the payments and would fold, Shirey said. He said the new law violates Proposition 22, a 2010 ballot initiative that says the Legislature can't take money from redevelopment agencies to balance the budget.

AP NewsBreak: Calif. delays cap and trade

By JASON DEARENAssociated Press

Published: Wednesday, Jun. 29, 2011 - 4:50 pm

SAN FRANCISCO -- California regulators on Wednesday said they would give power plants, refineries and other major polluters another year to comply with a new state program that provides financial incentives to emit fewer greenhouse gases.

Most polluters previously were to have begun cutting emissions under the program in 2012. The program was passed in December by the board, which said it hoped other states would follow suit since Congress had failed to pass national climate change legislation.

"This would not affect the stringency of the program or change the amount of emission reductions that the program will achieve, keeping us on track to meet the 2020 target required by AB32," Nichols said.

Cap and trade is the key piece of the California's 2006 climate law - called AB32 - and will cover 85 percent of the state's worst polluters.

Nichols said the state would still initiate the regulatory framework for cap and trade in 2012, pending the outcome of an appeal of a lawsuit challenging the program.

In general terms, California's cap-and-trade program works by requiring companies that produce pollution, such as a utility or a refinery, to buy permits from the state that allow it to send a specified amount of carbon dioxide and other greenhouse gases into the air each year. Those permits could then be bought and sold by the polluters in a marketplace.

If a company in Long Beach is 20 percent under its pollution allowance, for example, it can sell the unused portion to a company in San Francisco that has exceeded its quota.

The seller company gets to keep the money, so polluters can even make a profit, if the marketplace sets a price above the initial cost of the permit.

The amount of emissions allowed would be reduced over time, and the regulations would expand in 2015 to include refineries and fuel distributors, such as oil companies.

The cap would reach its lowest level in 2020, when California wants its greenhouse gas emissions reduced to 1990 levels.

The delay announced Wednesday comes about three months after a San Francisco Superior Court judge halted work on the program, saying the air board had not properly considered alternative programs, as required by state law.

But a state appeals court on Friday allowed the board to resume work on the program, pending an appeal. That has allowed the board to schedule two public hearings on July 8 and 15 to discuss the plan.

"The delay in initial compliance lets the program get on its feet without the angst of everybody asking the question 'are they ready?'" said Jon Costantino, a senior adviser at a Sacramento law firm who served formerly as the climate change planning manager at the Air Resources Board. He said the delay gives the board a full year to put finishing touches on the program without having to deal with companies dealing with compliance for the first time.

"Pressure was building on the program. This lets some of that go," he said.

Some environmental groups applauded the board's efforts to allow more time to hone the regulation while not giving up its overall goals.

"This is a smart and responsible step that also ensures that the greenhouse gas pollution reductions required by the program remain unchanged," said Derek Walker, director of strategic climate initiatives for the Environmental Defense Fund.

Second round of tuition hikes likely at UC and Cal State systems

The increase of at least 10% comes in response to deeper cuts to education in the new state budget. The opening of UC Riverside's new medical school will be delayed by a year. Student leaders express disappointment.

Students walk between the Lough Memorial Fountain and Brotman Hall at Cal State Long Beach. (Photo by Allen J. Schaben / Los Angeles Times)

Students at the University of California and Cal State University systems are likely to face a second round of tuition hikes this fall in response to deeper funding cuts in the new state budget, officials and student leaders said Wednesday.

Discussions are underway for tuition increases of at least 10%. That hike would come on top of an 8% increase at UC and a 10% boost at Cal State that already are set to take effect this fall.

An early victim of the state budget cuts is a new medical school at UC Riverside. Campus officials said Wednesday they would delay opening the school by a year, until fall 2013.

Student leaders expressed disappointment about their soaring tuition and said that Sacramento is putting the brunt of the state's budget problems on them. A decade of increases has more than tripled tuition to about $11,000 a year at UC and $4,884 at Cal State, not including room, board and other fees.

"Ultimately, this again represents the ongoing disinvestment in higher education in California," said Christopher Chavez, outgoing president of the Cal State Student Assn. "What it comes down to is that students are expected to pay more and to get less."

UC student regent Alfredo Mireles, a graduate student at UC San Francisco, said he understands why regents would probably approve further tuition increases rather than layoffs that would diminish academic quality. Still, he said he would vote against any increase to protest what he described as state leaders' lack of compassion.

"The general sentiment seems to be that my generation and those that follow mine don't deserve an accessible and affordable university," he said.

Nathan Brostrom, UC's executive vice president for business operations, said it was "very likely" that UC President Mark G. Yudof would ask the regents to approve a tuition increase at their meeting in San Francisco in July. He said the size of the increase and whether it would go into effect this fall or winter remain under study.

A 10% increase — about $1,100 per undergraduate student — would cover the extra $150 million reduction in UC's state funding included in the new state budget, but the 10-campus university might need more to help pay for growing pension and healthcare costs, he said. The costs of graduate and professional school programs are expected to rise as well.

The 23-campus Cal State system is looking at an additional 10% to 15% tuition hike, as much as $733 more per student. It is also considering enrollment cuts in the winter and spring terms and employee reductions through attrition and layoffs, officials said. The Cal State trustees will consider the proposals at a meeting in Long Beach on July 12.

Both universities promise additional financial aid to help needy students.

Under a previous budget plan, state funding to each university system was to drop by $500 million. Now, with Gov. Jerry Brown's proposal to extend several temporary taxes blocked by Republicans, the budget approved late Tuesday by the Legislature's Democratic majority increases those cuts by $150 million for each system and includes the possibility of an additional $100-million reduction each if legislators' forecast of an extra $4 billion in revenue does not materialize.

"It may not be the worst-case scenario, but it's a pretty bad-case scenario," said Robert Turnage, Cal State's assistant vice chancellor for budget. The $650-million reduction represents a cut of about 25% from last year's state support, he said.

At UC, the $650-million reduction represents a 21% drop in state funds. UC's overall budget is $20 billion, including hospital revenue, federal research grants and other items, but the non-state funding usually does not support undergraduate education, Brostrom said.

Cal State and UC students are advocating legislation under review in Sacramento that would require legislators and university officials to consult with students and give six months' notice for tuition hikes. If approved, the measure, AB970, authored by Assemblyman Paul Fong (D-Sunnyvale), probably would not change the current tuition proposals.

At UC Riverside, administrators said they were unable to win the stable state funding that an accreditation agency required before giving the proposed medical school its stamp of approval.

Although student applications won't be accepted this year, staff members will continue to work on establishing programs and raising money, according to campus Chancellor Timothy P. White.

"This is a temporary setback, but we will prevail," White said in a prepared statement.

Universities, redevelopment agencies ponder the budget ax

Local governments and California's public colleges and universities may have been resigned to the impending cuts after the state Legislature late Tuesday approved an $86 billion budget. By Wednesday morning, however, the reductions seemed increasingly hard to swallow.

UC and CSU officials warned of possible tuition hikes, layoffs and fewer admissions. They also said they must now prepare for more slashing halfway through the academic year. The additional cuts would be "triggered" if revenues don't meet optimistic projections -- a possibility that left educators feeling anxious.

Likewise, supporters of the state's nearly 400 active redevelopment agencies -- who for months had fought to mend rather than end the 66-year-old urban revitalization program -- said their likely elimination will harm the state's economy.

Advocates for the agencies again vowed to take their case to the state Supreme Court, arguing that the Legislature's decision to grab $1.7 billion of the agencies' funds is unconstitutional because voters in November passed Proposition 22, which was designed to prevent Sacramento's raid of local tax revenue.

"I think our chances are pretty good," San Jose Mayor Chuck Reed said of pending litigation that may involve the city's struggling agency. "But it doesn't matter what I think. It's what some judge thinks."

The UC and CSU systems will each absorb a $150 million cut, in addition to $500 million in reductions made to each system in March. On top of that, both face up to $100 million in cuts in early 2012.

"I'm disappointed," UC Santa Cruz Chancellor George Blumenthal said. His campus has already trimmed $31 million from next year's budget. And after five years of decreased funding, he said, "the last cuts are the hardest."

Redevelopment agencies could continue to survive if they "pay to play'' and agree to divert a certain amount of their property tax revenue to schools, fire protection districts and transit districts.

For fiscal year 2011-12, which starts Friday, each agency would have to pay its portion of the $1.7 billion and, starting in 2012-13, its part of $400 million annually.

By Wednesday, the California Redevelopment Association said about 50 agencies so far -- including San Jose's -- have indicated they cannot make those payments.

The San Jose Redevelopment Agency would have to pony up from $47 million to $52 million next year -- and about $11 million to $13 million each year after that.

"We don't have that much money laying around," Reed said.

The 23-campus CSU system will lose nearly a quarter of state support for its operating budget. To cope with the reductions made Tuesday, the universities could be looking at tuition increases, furloughs, layoffs and other system-wide remedies, said San Jose State spokeswoman Pat Lopes Harris.

Community college budgets will decline $400 million and also could face more cuts early next year. For the San Jose-Evergreen Community College District, that translates to $5.6 million out of a $78 million operating budget, Chancellor Rita Cepeda said.

The uncertainty about the possible mid-fiscal-year cuts, she said, "is frustrating. And it's irresponsible."
The Legislature's budget largely spared K-12 education by keeping funding flat. But if more cuts are triggered early next year, schools could be left on the hook for $1.7 billion, or $283 per student.

If that's the case, the state could give districts permission to lop off up to seven days of instruction. Still in question is whether each of California's approximately 1,000 school districts would have to negotiate those cuts with employee unions.

On top of the five-day reduction that the state already permits, trimming even seven days could give California the shortest school year in the nation.

In addition, the state is balancing its budget by issuing nearly $3 billion in IOUs in lieu of payments to school districts. California has already put off more than $7 billion owed to the districts.

"It just means we will have to borrow more money," said Superintendent John Porter of San Jose's Franklin-McKinley School District. Its board already has authorized borrowing up to $15 million because of late state payments, costing the district thousands of dollars in interest, Deputy Superintendent Tim McClary said.

San Jose Unified has already anticipated the mid-year cut in its 2011-12 budget, CBO Ann Jones said. If the "trigger" cuts happen, the district most likely would reduce teaching days in the 2012-13 year.

The possible end of many redevelopment agencies will also greatly impact affordable housing programs, which have depended on 20 percent of the property taxes each agency collects.

San Jose Housing Director Leslye Corsiglia said despite the bad news, her department will do its best to carry on with other federal, state and local funds.

Even before Brown proposed in January to abolish the agencies, the San Jose Redevelopment Agency was already fighting for its life because of the steep drop in property values and tax revenues, as well as its massive debt.

The agency this month laid off all but eight of its remaining 31 employees.

At its zenith in fiscal year 2002-03, the agency employed 134 people. And as recently as the summer of 2009, that number was 119.

Teachers win layoff protection while school finance officials see their powers curtailed in the state budget package Gov. Jerry Brown is expected to sign today.

The last-minute school legislation, Assembly Bill 114, emerged publicly less than an hour before lawmakers approved it in a late-evening Tuesday session. It reflects the negotiating muscle of teachers as Democratic lawmakers crafted their majority-vote budget with a governor of their own party.

"This provides stability for students and teachers," said Dean E. Vogel, the new president of the California Teachers Association. He said the bill stems the tide of an estimated 30,000 job losses that teachers have faced since the recession began.

Lawmakers blocked K-12 districts from laying off teachers for the upcoming fiscal year. Teachers also won provisions requiring districts to ignore – for now – the prospect of a $1.75 billion "trigger" cut that could hit K-12 districts if optimistic revenue projections fall short.

Instead, the state is requiring districts to assume they will receive the same amount of money as this past fiscal year "and maintain staffing and program levels commensurate with this funding level," according to an Assembly analysis.

Brown's Department of Finance said the latter provision could even cause some districts to rescind pink slips handed out earlier this year. CTA estimates that 20,850 of its members received layoff notices earlier this year, while districts have pulled back 8,524 of those.

Elk Grove Education Association President Maggie Ellis said Wednesday she was still unclear on portions of the bill, but was happy it retains teachers' jobs.

"We support anything that will bring stability to our kids, and not laying off teachers is a key part of that and not increasing class sizes is a key part of that," Ellis said.

School officials said they aren't eager to implement layoffs, but they contend the measure will make it difficult to manage their finances and negotiate with teachers.

"Districts will be under tremendous pressure to bring people back from layoffs and, if there is a midyear cut, there is no way to lay people off," said David Gordon, Sacramento County superintendent of schools.

"How then do you handle a midyear cut?"

Others said it was the first time they could recall the state mandating that districts assume a certain level of funds, a function each district usually exercises.

"Obviously, legislators went out of their way to protect teachers from layoffs, notwithstanding the level of funding they're providing for schools," said Rick Pratt, assistant executive director with the California School Boards Association.

Because the budget sent to Brown relies on an optimistic revenue projections, it contains "trigger" cuts that would take effect if tax dollars fall short. One of the most significant is a reduction in the school year by an additional seven days.

However, AB 114 reiterates that districts must negotiate any such cut with teachers and staff. With layoffs off the table, teachers may have more leverage in those discussions to block school-year reductions.

The California Teachers Association has long wielded tremendous clout in state budget negotiations. It is a multimillion-dollar player in state political campaigns – and is widely expected to help fund Democratic efforts to raise taxes on the November 2012 ballot.

Another provision in the bill would make the state liable for roughly $2.1 billion in retroactive school funding if voters reject or never get the chance to vote on such a measure.

Vogel said teachers simply have become "very, very discouraged" after rounds of layoffs. "They don't think too much about, 'Is this going to give us a better opportunity at the bargaining table?' " he said.
School finance officials were frustrated at another part of the bill that suspends three-year oversight of district budgets by counties.

That process typically forces districts to balance their budgets beyond one year, at risk of state and county intervention if finances fall short. State Superintendent of Public Instruction Tom Torlakson announced this month that 143 school districts statewide were in financial jeopardy.

Natomas Unified interim Superintendent Walt Hanline called the measure "the most irresponsible piece of legislation I've seen in my 35 years in education."

Redevelopment an issue in Senate GOP leadership fight?

Senate Republican leader can be a hard job to hold onto in Sacramento. In recent years, the GOP Caucus has tossed aside leaders for issues ranging from a budget vote to fundraising. But a new factor appears to have made its way into the latest leadership battle: redevelopment.

The fight over redevelopment agencies, or RDAs, doesn’t appear to have anything to do with why current leader Sen. Bob Dutton, R-Rancho Cucamonga, is reportedly on his way out. That’s happening because Dutton told his caucus last week that he’s exploring an Assembly bid, although the Republicans' frustration at getting so little out of the budget negotiation may also play a role.

But the RDAs may determe Dutton’s successor.

For months, eyes have been on Sen. Bob Huff, R-Diamond Bar, as Dutton’s likely replacement. But, according to Capitol sources, discomfort about Huff’s wife’s role in protecting RDAs has given a boost to a new challenger, Sen. Joel Anderson, R-El Cajon.

Huff’s wife, Mei Mei Huff, has been working as a consultant to developer Ed Roski Jr. The revelation, first reported in the Los Angeles Times, came from Sen. Huff’s financial disclosure forms filed with the Fair Political Practices Commission.

Roski wants to build a 75,000-seat NFL stadium in the City of Industry. The controversial project would be located next to an enterprise zone, where RDA money could be used to renovate nearby businesses and infrastructure, providing an indirect benefit to the project if it got off the ground.

Sen. Huff has been one of the staunchest defenders of RDAs in the Legislature. The vice chair of the Senate Budget Committee has pushed a compromise to Gov. Jerry Brown’s plan to save about $1.7 billion by eliminating state support for RDAs, and has been keeping a couple of placeholder bills alive for the purpose.

This has led some to say that there is the appearance of a conflict of interest involving Sen. Huff. However, a spokesman for Roski’s firm, Majestic Realty, said Mei Mei Huff Consulting LLC was not involved with the company’s redevelopment-related projects.

Huff spokesperson Bill Bird also said there was no conflict of interest. “He’s never hidden his support for redevelopment. All but two cities in his district have redevelopment components.”

“He drew a line that didn’t exist,” Bird said. I have a stack of letters here from cities saying ‘don’t go there.’”

For his part, Anderson’s spokesperson refused to talk about the leadership fight.

Republican lawmakers have traditionally defended RDAs, although there are exceptions. The most outspoken critic of RDAs in the Legislature is Assemblyman, Chris Norby, R-Fullerton.

Oddly, sources say that the majority of senators supporting Anderson also support redevelopment. The issue wasn’t Huff’s position on the agencies, but rather the potential appearance of a conflict.

Dutton’s announcement came during a caucus meeting last week. Dutton terms out of the Senate next year, but still has two two-year terms available to him in the Assembly if he can win a seat in next year’s redistricted elections.

The move appeared to push Huff to shore up his support, with a decision on a new leader likely coming sooner than he had expected. But, according to sources, some senators approached Anderson because of their discomfort with Huff’s wife’s business.

The Republican Caucus has a history of looking to its more conservative members for leaders, at least over the last two to three years. After a period of relatively more moderate leaders like Dick Ackerman and Dave Cogdill — who was ousted after providing a key vote for a compromise Feb. 2009 that included some of the same temporary tax increases that Brown has been trying to extend — the caucus turned to Dennis Hollingsworth.

A conservative Republican who focused on hot-button issues like partial birth abortion, Hollingsworth had a contentious run as leader that coincided with a sharp drop in fundraising by the California Republican Party. The Senate leader is usually seen as a key fundraising figure, and that was reportedly part of the reason they turned to Dutton. That change was announced in January of last year, but didn’t take place until October, just before Hollingsworth termed out, and unusually long transition.

Hollingsworth’s vacant seat was won by Anderson, a two-term Assemblyman who had the distinction of being one of the few legislators who was arguably even more conservative. He might be best-known for a bill to force California’s public employee pension system to divest from any business in Iran.

Early last year, he was the one sitting legislator to record an endorsement for Better Courts Now, a group formed by late Chula Vista-based Pastor Don Hamer to elect conservative judges to fight same sex marriage and abortion. Last August, he was the only legislator to vote against AB 2199, a bill to remove homosexuality from a list of “mental illnesses” to be researched by the State Department of Mental Health.

In any case, RDAs appear to be dead, at least in their current form. According to sources, a major Democratic supporter of RDAs, Sen. Rod Wright, D-Los Angeles, had been preparing a compromise bill that would save some of their funding.

But, according to an email sent out Tuesday night by supporters of RDAs, the bills to abolish them are about to be signed by Gov. Brown. They were passed by Democrats in both houses on Tuesday, as part of the majority vote budget agreement announced by Brown and Democratic legislative leaders on Monday afternoon.

“We’re deeply disappointed that slim majorities in the legislature passed this budget that relies on the illegal extortion of revenues from redevelopment agencies that will never materialize,” wrote John Shirey, executive director of the California Redevelopment Association, in a statement. “If the Governor signs the redevelopment trailer bills (AB x1 26/27), we’ll quickly file a lawsuit to prevent these unconstitutional measures from becoming law.”

Shirley continued: “We thank Senator Rod Wright and Senator Bob Huff for their leadership throughout this process, as well as Senators Michael Rubio, Leland Yee, Lou Correa, Assembly Member Anthony Portantino and the many Republicans who refused to vote for this illegal and fiscally reckless proposal.”

With the certainty of deep cuts to the University of California and California State University in the new state budget - each by $650 million - comes another certainty: higher tuition to make up the difference.

"Cuts of this magnitude inevitably will drive up tuition for public university students and their families," UC spokesman Steve Montiel said Tuesday, providing a grim forecast just weeks before an 8 percent tuition hike kicks in that will bring tuition at UC's nine undergraduate campuses to $11,124 - or $12,150 when mandatory campus fees are included.

UC has predicted a substantial tuition increase on top of that if forced to absorb such a cut in the 2011-12 school year. Gov. Jerry Brown is poised to sign the budget by the end of the week.

At CSU, the trustees are tossing around the possibility of raising tuition 15 percent for next spring, which they could vote on as early as July 12. CSU students already face a 15 percent tuition hike this fall, bringing the price to nearly $6,000 with mandatory campus fees.

Some students don't even call the increases "tuition" anymore, but tax increases. They say state lawmakers are deceptive in claiming to have passed the budget without raising taxes.

"Every time we raise taxes on students, the Legislature is off the hook - because we pay the tax, but they don't make that clear," said Steve Dixon, a Sacramento State University graduate student in economics who serves on the CSU Board of Trustees.

At UC, the gradual shift from state to student support suggests the public university is becoming privatized.
"It is fair to begin wondering whether it is appropriate to continue calling the University of California a public university system," said Alfredo Mireles, a UCSF nursing student and member of UC's Board of Regents.
For the first time this fall, UC expects to take in more from tuition than state funding.

"The abandonment of state support of public universities creates some big problems, and, ultimately, these problems have an impact on everyone in our society," UC President Mark Yudof told fellow lawyers last month in San Francisco.

He warned that some university departments with ties to lucrative donors - engineering or business - will prosper at the expense of, say, the English department or libraries.

Meanwhile, the UC Student Association is urging students to tell Brown not to sign the budget. Although the governor vetoed lawmakers' last attempt at a budget two weeks ago, that is unlikely now as this one was crafted with his approval.

UC students have also joined CSU students to push for a change in state law to force lawmakers and university leaders to consult with students 90 days before announcing a tuition increase, and to analyze its impact.

"We say it forces the conversation to happen in public, and forces them to justify fee increases," said Chris Chavez, president of the California State Student Association.

Reporting from Sacramento -- Gov. Jerry Brown, whose signature more than three decades ago gave agricultural workers the right to unionize by secret ballot, vetoed a bill Tuesday that would have made it easier for farm laborers to organize.

The proposal has been the top legislative goal for years for the United Farm Workers, whose founder, Cesar Chavez, had strong ties to Brown. It would have allowed the union to bargain for employees without holding an election — by simply collecting signatures from a majority of workers on cards saying they wanted representation.

Gov. Arnold Schwarzenegger vetoed similar measures four times during his seven years in office. Supporters of the latest bill had been hopeful that Brown, a Democrat who often spoke of his relationship with Chavez during his gubernatorial campaign last year, would approve it.

In his veto message Tuesday, Brown cited his work with the union 36 years ago.

"I am not yet convinced that the far-reaching provisions of this bill … are justified," Brown wrote.

Union leaders reacted angrily.

"To us it's a real clear decision," UFW President Arturo Rodriguez said. "This governor has decided to side with the rich against the powerless."

The veto highlights the diminishing clout of the UFW, which once commanded the attention of national leaders, including Robert F. Kennedy. The group's influence has been eroding steadily. Membership has dwindled from about 26,000 a decade ago to just over 5,200 last year, according to statistics that the union provided to the U.S. Department of Labor.

The pressure on Brown to sign the bill, SB 104, by state Senate leader Darrell Steinberg (D-Sacramento), was intense. For nearly two weeks, UFW representatives flooded the Capitol, urging Brown to approve the measure. They held protests and vigils outside Brown's office and even brought Chavez's chair to the governor, inviting him to sit in it and ratify the legislation.

Steinberg's bill was a priority for Democrats this year and one Republicans fiercely opposed. The governor's veto — on the heels of a budget deal struck with Democrats alone — helps keep him in the political center. Brown has often referred to such centrism as "the canoe theory" of governing: paddling a little on the left, a little on the right and staying in the middle.

The union enlisted many of the state's top Democratic leaders to solicit the governor's signature. They included Los Angeles Mayor Antonio Villaraigosa and Rep. Howard L. Berman (D-Valley Village), who as a state assemblyman wrote the Agricultural Labor Relations Act of 1975.

Opponents of the bill included a large coalition of business and agricultural interests, including the California Chamber of Commerce, the California Grocers Assn., the California Restaurant Assn. and the Western Growers Assn.

They argued that the bill would have created excessive new fines against growers found to be committing unfair labor practices, and the "card check" provision would allow for mischief by union organizers.

"It sets the stage for intimidation by the union," said Tom Nassif, president and chief executive officer of Western Growers. "It doesn't allow a true free choice."

Supporters of the bill countered that growers now coerce laborers into voting against their own interests.

Union leaders vowed Tuesday night that they would try again to win the governor's support.

New budget, same old problem

The state budget Democratic lawmakers presented Tuesday relies largely on a newly optimistic revenue projection that assumes California’s economy will return to health with gusto in the coming months.

That’s a big assumption, and if it doesn’t pan out, up to $2.6 billion in spending cuts will be automatically triggered early next year.

But even if the tax revenue grows as much as the Democrats hope or the spending cuts are implemented, the state will almost certainly face a multi-billion shortfall a year from now.

Tuesday’s budget plan, combined with more than $10 billion in spending cuts adopted in March, is expected to permanently erase about $21 billion of a $27 billion budget shortfall the state faced last winter, legislative leaders estimate.

About $9 billion of that $21 billion comes from higher tax revenue – most of it either money already collected this spring that exceeded earlier projections or new estimates of higher revenues in the coming year. About $700 million will come from higher fees on vehicles and on home insurance policies, to pay for fire protection in state wildlands.

About $12 billion of the solution will come from cuts in spending or in projected spending levels.

Democrats voted in March to cut welfare grants, reduce aid to the aged, blind and disabled, and limit benefits for homebound invalids. The plan will also charge the poor and the working poor more money for their health care while cutting payments to doctors and hospitals that provide that care. The budget all but eliminates local redevelopment agencies and cuts projected spending on the University of California and the California State University System.

And if the additional spending cuts are triggered next year, the public schools could be forced to slice a week off the school year and the universities would almost certainly raise tuition and cut classes again.

“We’ve made some very tough cuts in this budget,” Brown said.

But while the budget might be balanced on paper, many of the solutions used to get there will last only one year, so a new shortfall of at least $6 billion is expected to pop up a year from now. If the economy is weaker than expected or state costs grow faster than projected, that shortfall will grow.

That gap is what is known in the Capitol as the state’s “structural deficit” – an ongoing, persistent gulf between the amount the state collects in taxes and the spending that is required by current law.

“We still have our wall of debt out there,” Brown acknowledged Monday. “We still have work to do.”

The Democrats’ first choice for addressing that problem is to put a ballot initiative before the voters next year that would raise taxes to balance the state’s books over the long term.

That approach is similar to Brown’s original plan, which he began pushing in January, to extend about $10 billion in temporary taxes that have already expired or will expire at midnight Thursday with the end of the current fiscal year.

Brown pledged during his campaign last year not to raise taxes without a vote of the people. He later said that even extending those temporary taxes on income, sales and vehicles would need to be put to a vote to live up to his promise.

But he needed a two-thirds vote in the Legislature to call a special election on the taxes. And Democratic and Republican lawmakers could not agree on a plan to do that.

Most, if not all, of the Democrats were on board. A handful of Republicans said they would agree to an election if Democrats would also agree to put a new spending limit on the ballot along with changes to reduce public employee pensions. Democrats would not accede to those demands, and the two sides reached a stalemate.

“This latest budget is based on the hope that $4 billion in new revenues will miraculously materialize, but does absolutely nothing to change government as usual,” said Sen. Bob Dutton, the Senate Republican Leader.

“The Democrats have said no to all of the Republican reforms that Californians are demanding, including pension reform, a spending cap and job creation.”

But the Republicans lost any negotiating leverage they had once they said they would not vote to extend the temporary taxes until an election could be held. Democrats feared that, once the taxes expired, voters would be far more reluctant to restore them. Then, their worst-case scenario might arise: the taxes would be defeated but the spending limit and the pension reform might succeed at the polls.

So in the end, the Republicans got nothing except debating points. The Democrats passed a budget without them and will now look to the voters to bring in revenue for the long-term.

“Earlier this year the governor asked both Democrats and Republicans to get out of their comfort zones and do what was best for California,” Senate Leader Darrell Steinberg said. “For Democrats that meant agreeing to billions of dollars of cuts to vital programs….We delivered in March and we’re delivering again in June with billions more in cuts.

“The imperative for revenue is as great as before because there is still a structural deficit. We move on now to November of 2012 and the initiative process to get that part of the job done.”

In other words, there will be no rest for Californians weary of the state’s annual budget dance, with all the partisan posturing, threats of spending cuts and actual cuts, and calls for more taxes that come with it.

It looks as if this will all be with us for at least another year and a half.

Sacramento --
After months of fits and starts, the state Legislature approved a budget package Tuesday night to close what was once a $26.6 billion deficit - giving the state a spending plan before the start of the fiscal year and ensuring that lawmakers once again will receive their pay.

With remarkably little debate, both houses of the Legislature passed the eight bills that made up the final pieces of the state budget plan. Passage in the Senate was stalled over a controversial plan to eliminate and replace redevelopment agencies, but two Democratic holdouts gave their support after the Senate leader leaned hard on them for their votes.

Gov. Jerry Brown is expected to sign the measures soon, which bring general fund spending to $86 billon for the fiscal year that begins Friday, down from the current year's $91.5 billion.

The compromise package marks a milestone for Brown, whose sole focus since his unprecedented return to the governor's office in January for a third term has been to close the state's budget gap and put California on firmer financial footing. But the spending plan is significantly different from what he initially proposed, after GOP lawmakers refused to support a special election on taxes Brown had wanted.

Compromise set

On Monday, the governor finally gave up on talks with Republicans and, alongside Democratic legislative leaders, announced a compromise that relies heavily on spending reductions, rosy revenue projections and the possibility of deeper cuts to schools, human services and higher education if those revenues do not materialize.

Both houses began voting on the budget around 6:30 p.m. Tuesday. The Assembly raced through the bulk of the package in less than an hour, with only a handful of members rising to speak. Republican lawmakers unanimously opposed the budget bill, while the entire Democratic caucus voted in support.

"This budget relies primarily on cuts - brutal cuts - which place many of us well outside our comfort zone. These cuts will forever haunt our conscience," he said. "However, those who do vote for this budget can take solace in the fact that they did what was necessary to move California forward onto firm financial footing."

Assembly Budget Committee Vice Chairman Jim Nielsen, R-Gerber (Tehama County), criticized the package as "woefully short" on reforms and said he is doubtful that the extra tax revenue will materialize next fiscal year. Meanwhile, Assemblywoman Shannon Grove, R-Bakersfield, said the package "sets the state up for big government spending."

Trimming the deficit

The plan is the culmination of a months-long effort to eliminate the $26.6 billion deficit that California faced in January. Lawmakers took actions in March that were signed by the governor to reduce the deficit by $10.8 billion through a mix of cuts and shifts in state spending.

Those included deep cuts for health and social services, including new co-pays and caps on medical services and the elimination of the Adult Day Health Care program. Lawmakers also cut $577 million in funding for developmental disability services.

In May, an official update of real and anticipated tax revenues sliced the remaining deficit to $9.6 billion. This week, officials at the Department of Finance said revenues for the new fiscal year that begins Friday are expected to be $4 billion higher than expected, cutting the deficit further.

Also part of the final plan are $300 million in additional cuts to the University of California and California State University systems, a $450 million unspecified cut to health programs, $460 million in cuts and one-time delays of funding for courts, and the postponement of an almost $3 billion payment to schools.

No new taxes

The plan includes no new taxes - though it does raise vehicle registration fees by $12 - and it includes no changes in public employee pensions, environmental regulations or spending restraints sought by Republicans.

Though Brown remained confident until this weekthat he could persuade four Republicans in the Legislature to support his plan, he was never able to win them over. Republicans in the Senate said the governor would not agree to putting their plan for changes in public employee pensions on the ballot.

California budget timeline

Jan. 3: Gov. Jerry Brown is sworn in as California's 38th governor. The state faces a projected $26.6 billion deficit through June 2012.

Jan. 10: Brown introduces his $84.6 billion spending plan, which includes drastic cuts to social services and higher education. He pushes for tax extensions and increases - but only with the approval of state voters - to raise $14 billion to help plug the deficit.

March 16-17: The Legislature approves $10.8 billion in cuts and other solutions proposed by Brown. Deficit shrinks to about $15 billion.

May 16: Brown revises his spending plan, saying that an unexpected $6 billion uptick in revenues has reduced the deficit to $9.6 billion. His plan increases education funding by $3 billion and drops one of four proposed tax increases.

June 15: Democrats in the Legislature, facing a constitutional deadline to pass a budget and unable to win Republican support for taxes, pass their own plan by majority vote to close the remaining deficit. It's devoid of taxes and draconian cuts.

June 16: Less than 24 hours after the budget is passed, Brown vetoes the spending plan, saying he opposed the "billions of borrowing, legal maneuvers that are questionable and a budget that will not stand the test of time." Shocked Democrats say they are "dismayed" by the governor's action.

June 21: In another blow to Democrats, Controller John Chiang cuts off lawmakers' pay, saying the plan they adopted June 15 was not balanced.

June 27: Brown and Democratic leaders in the Legislature announce they have agreed to a revised plan to close the state's remaining $9.6 billion deficit as the governor abandons efforts to win Republican support for taxes. The plan relies largely on $4 billion in newly projected revenues.

June 28: The Legislature approves a new $86 billion spending plan for California.

Mayor Johnson urges pension talks to save Sacramento police jobs

One by one, Sacramento police officers handed in their badges this week, victims of another wretched budget at City Hall.

And for their union, Mayor Kevin Johnson had a message.

In his strongest words to date on the subject, Johnson said Tuesday that city cops must discuss contributing to their pensions in order to save 42 police officers from being laid off.

Dozens more crime scene investigators, community service officers and administrative staff members in the Police Department are also losing their jobs.

With just two days left in the fiscal year, there is little chance that an agreement on salary concessions could be reached before the police layoffs go into effect.

But the mayor said that he and other members of the City Council are "desperately reaching out" to the police union, and he is hopeful the effort will continue into summer.

Johnson said it is "unrealistic to think there won't be real discussions about pension reform."

"We do not want the public to be caught up in a stalemate," the mayor said.

The layoffs create a difficult situation for Johnson. He has been strongly supported by the public safety unions and has said he wants the city to have two police officers per 1,000 residents.

After this round of cuts, the city would need to add roughly 275 cops to get to that ratio.

So far, the police union has not agreed to open its contract, which runs until 2013.

Police officers and firefighters do not pay into their CalPERS retirement funds. It's a contract arrangement that the City Council has agreed to in the past but is now seeking to undo as a cost-saving measure.
Six council members – Sandy Sheedy, Rob Fong, Jay Schenirer, Kevin McCarty, Bonnie Pannell and Darrell Fong – voted for a budget package that included the police cuts.

The mayor and council members Angelique Ashby and Steve Cohn voted against the plan.

In voting for the budget, the six council members made it clear they wanted long-term budget solutions – including changes in pension contributions – and not one-year salary concessions.

According to city budget officials, if police officers and firefighters contributed 4 percent of their salaries into their CalPERS accounts – the same amount that most other city workers pay – it would save the city more than $4 million a year.

Top city management officials also do not contribute to their pensions.

Brent Meyer, the head of the police union, said that even if police officers paid 9 percent of their salaries into their pensions, it would save the city just $5.2 million – less than half the amount being cut from the police budget.

Those savings might spare the 42 police officers being laid off, but community service officers and other employees would still lose their jobs, he said.

"We're interested in meaningful discussions, but we want to save everybody," Meyer said.

Meyer said the union was open to discussing pension changes when it last agreed to salary concessions in 2009, but that city management shied away from the issue.

He said the union is "not ignorant to the fact that the world is changing and we have to change with it."
If the police union agreed to pay into their retirement plans, Johnson said he was hopeful the City Council would agree to match that concession with one-time funding.

Several council members, however, have said they are reluctant to touch the city's economic reserve fund.

By agreeing to a majority-vote budget, passed by Democrats in the Legislature on Tuesday, he conceded he could not.

The pact laid bare Brown's limitations: Though closing California's remaining $9.6 billion budget deficit, the budget relies on $4 billion in revenue that may not materialize and could force a round of midyear cuts. It puts off at least until next year any public vote on taxes.

For a few hours Tuesday, the budget's fate was in limbo as key Senate Democrats held out for a new bill that would not eliminate redevelopment agencies. But two lawmakers ultimately relented, sending the $86 billion general-fund plan to Brown less than three hours before midnight.

Despite focusing the first six months of his administration on negotiations with Republican lawmakers, the Democratic governor could not find the two Republican votes needed in each house to put a tax measure on a ballot.

"The premise here was that one man could outmaneuver the system … that the governor, through his wiles, his skills, his experience, could change things in Sacramento," said Bill Whalen, a research fellow at Stanford University's Hoover Institution and former speechwriter for Gov. Pete Wilson. "That premise was a patent failure."

Before taking office in January, Brown believed he could reach a budget deal with the Legislature by March, within 60 days of releasing his budget proposal.

"I'm not giving up," Brown said three months ago, after missing his first, self- imposed deadline. "I've been around a long time. I know we can do it."

Tuesday was the 170th day.

Squeezed between Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez at a news conference in his office on Monday, Brown said, "I thought we were getting close, but as I look back on it, there is an almost religious reluctance to ever deal with the state budget in a way that requires new revenues."

Instead, Brown agreed to a budget that includes further spending reductions, including in education, if revenue projections fall short, and leaves open the possibility of pushing deficits into next year.

The agreement left unclear the future of Brown's bid for an election on taxes. In recent months, he characterized consulting the electorate as not only a political necessity but a moral imperative.

Brown said he would "look very seriously" at a voter initiative. Many of Brown's Democratic allies believed a tax election could not be won this fall, while turnout is expected to be more favorable for Democrats in the presidential election in November 2012.

"For Jerry Brown, this is a 'live to fight another day' budget," said Dan Schnur, a veteran GOP strategist and director of the Jesse Unruh Institute of Politics at the University of Southern California. "This agreement might not help him very much. But it's probably not going to hurt him, either, and at the very least leaves him to fight another day."

Two weeks ago, it appeared that Brown's position in budget talks had improved. His veto of Democratic lawmakers' first budget, on June 16, was widely praised by political observers, and his reasoning – that it was unbalanced – invited state Controller John Chiang's decision to block lawmaker pay.

Assuming Brown signs the budget package, lawmakers will get paid for work as of Tuesday. All told, rank-and-file members lost about $4,830 each over 12 days.

The pay withholding afforded Brown additional leverage, and he suggested as recently as last week that talks could continue for at least a "few weeks" more.

But Legislative Democrats fumed, attacking Brown publicly and demanding a budget alternative. Their feuding recalled Brown's sometimes-bitter relationship with the Legislature when he was governor before, from 1975 to 1983, and Jeff Cummins, a political science professor at California State University, Fresno, said "perhaps that experience was set in his mind, and he didn't want to start off his term getting off on the wrong foot with Democrats."

Cummins said Brown "probably came to the conclusion that it was better to get something done rather than continue to drag this out."

Brown acknowledged that this budget was not his first choice. He said Monday that the state's "wall of debt" remains, and he suggested a tax measure still is necessary for long-term stability.

But the spending plan includes elements significant to Brown, including funding his plan to shift some state services to local governments.

"Jerry Brown's a realist, and he's trying to deal with this situation as he has to," said Bill Carrick, a Democratic strategist. "You can only do as good as you can do."

Talks between Brown and Republicans broke down most recently over Republicans' unwillingness to extend temporary tax increases until after a fall election on those taxes. Brown spokesman Gil Duran said Brown accepted the Democrats' majority-only budget only after exhausting talks with Republicans.

"We can't sit here until we're covered in cobwebs waiting for them to be reasonable," Duran said Tuesday. "He's doing his job. He did his best to broker a bipartisan deal, but instead he had to find a way to wade through the dysfunction and get a budget on time."

The Supreme Court ended its term with a vigorous defense of free speech, striking down a California law that banned sales of violent video games to minors and effectively shielding the entertainment industry from any government effort to limit violent content.

"Like books, plays and movies, video games communicate ideas," said Justice Antonin Scalia in his majority opinion Monday. And he said there was "no tradition in this country of specially restricting children's access to depictions of violence. … Grimm's Fairy Tales, for example, are grim indeed."

The decision, coming on the term's last day, highlights a consistent theme of the high court under Chief Justice John G. Roberts Jr.: Freedom of speech is almost always a winner, even if the context is unusual.

The court will have another opportunity next term to test the reach of the Constitution's protection of speech. The justices said they would hear a case about the longstanding federal regulation of prime-time television broadcasts. The case concerns whether the Federal Communications Commission can punish broadcasters for showing nude scenes or airing four-letter words in prime time.

Over the last few years, the court's 1st Amendment cases have leaned heavily toward protecting speech. Last year, the court upset animal rights advocates when it struck down a law that forbade the sale of videos showing animals being tortured. And in a much disputed decision, the justices ruled that corporations and unions had a free-speech right to spend unlimited sums on political campaigns. Last week, the court struck down a Vermont law that barred the sale of private drug prescription records. The court said the data was "speech" and could be traded in the "marketplace of ideas."

Monday also saw another campaign funding law fall on free-speech grounds. A 5-4 decision rejected part of an Arizona law and said states could not give extra money to candidates who abided by spending limits because doing so impeded the speech of candidates who would prefer to spend more.

Though the outcome in 1st Amendment cases has been consistent, the voting has not followed the usual conservative-liberal pattern.

In Monday's decision in the case of Brown vs. Entertainment Merchants Assn., a 7-2 majority voted against California's law, but the justices were divided 5 to 4 over whether violence in the media could ever be regulated to protect children.

Scalia's opinion voiced strong support for free speech even when children are the audience. But his support came with an exception established in cases four decades ago: The law can protect children from sex and pornography in the media, he said, but it cannot protect them from violence. He cited court precedents that exempted from the 1st Amendment obscenity and pornography directed at children.

Justice Clarence Thomas, usually a conservative ally of Scalia, took the opposite view. Writing in dissent, he said California's law should be upheld because juveniles had no right to free speech. In the past, Thomas voted to strike down anti-pornography laws. Justice Stephen G. Breyer also said he would have upheld California's law.

Justice Samuel A. Alito, joined by Roberts, agreed California's law should be struck down, but only because it did not clearly spell out which games would violate the law.

The video game law passed the Legislature in 2005. It would have imposed a $1,000 fine on those who sold or rented a video game to someone under 18 that featured the "killing, maiming, dismembering or sexual assaulting" of a human image and "appeals to deviant or morbid interest." Before the law could take effect, the gaming industry sued, and judges put the law on hold.

Alito praised the state's lawmakers for a "well-intentioned" effort to deal with "a potentially serious social problem: the effect of exceptionally violent video games on impressionable minors."

He devoted most of his opinion to describing the "astounding" level of violence in the games. "Victims are dismembered, decapitated, disemboweled, set on fire and chopped into little pieces. They cry out in agony and beg for mercy. Blood gushes, splatters and pools," he wrote.

Officials of the video gaming industry said they were pleased and relieved by the decision. A ruling upholding California's law would almost certainly have triggered laws in other states as well as broader measures to restrict violence in the media.

Michael Gallagher, president and chief executive of the Entertainment Software Assn., said the court's decision was "an overwhelming endorsement of the 1st Amendment, the right to free expression and the freedom of speech. It's also a great victory for parents and rights of parents. They are to be in control, not the state, of the content that is used, consumed and enjoyed in the home."

"This is everything the industry could have asked for," said George Rose, chief public policy officer for Activision Blizzard Inc., a Santa Monica game publisher.

Steven R. Shapiro, legal director for the American Civil Liberties Union, said the decision "reaffirms the important principles that children as well as adults are protected by the 1st Amendment and that the government's views on good child rearing are not an excuse for censorship."

Advocates for control of the media were disappointed.

"This ruling replaces the authority of parents with the economic interests of the video game industry," said Tim Winter, president of the Parents Television Council in Los Angeles. "With no fear of any consequence for violating the video game industry's own age restriction guidelines, retailers can now openly, brazenly sell games with unspeakable violence and adult content even to the youngest of children."

James Steyer, chief executive of Common Sense Media, a San Francisco nonprofit group that lobbied on behalf of the California law, vowed to find other means to restrict the sale of violent games to children. "The fight is far from over," Steyer said. "An overwhelmingly high percentage of parents would support a bill that would prevent their kids from walking into a store and buying the most ultra-violent and sexually violent of video games."

The same two sides are likely to square off in the fall when the court takes up the challenge to the dispute over TV regulation.

By law, broadcasters who use the public airwaves may not air indecent words or scenes when children are likely to be watching. And the FCC in the last decade has cracked down on networks that crossed the line. It handed down a $1.2-million fine against ABC for a brief nude scene in its police drama "NYPD Blue" in 2003. And it said Fox could be fined for live broadcasts of awards shows where guests uttered expletives.

Lawyers for the broadcasters went to court, arguing the rules were unwarranted and out of date in an era when cable networks and the Internet enjoyed broad free-speech protection. Last year, they won a ruling from the U.S. court of appeals in New York, which struck down the FCC's policy on free-speech grounds. The justices said they would take up the case — FCC vs. Fox and ABC — when they returned in the fall.